Dear Sir,
Company XY is a parnership firm (2 working partners). Book profit of the firm for the year 2012-13 is 62,000/-. My question is that as per IT act what will be the allowable remuneraion between the two partners (not paid any remuneration) ? and what will be the allowable remuneraion between them if the firm paid Rs. 72,000/- as remuneration?
Regards,
Asim Jana
| Originally posted by : asim jana | ||
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Dear Sir, Company XY is a parnership firm (2 working partners). Book profit of the firm for the year 2012-13 is 62,000/-. My question is that as per IT act what will be the allowable remuneraion between the two partners (not paid any remuneration) ? and what will be the allowable remuneraion between them if the firm paid Rs. 72,000/- as remuneration? Regards, Asim Jana |
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Deduction shall be the minimum of the following two:-
1) Amount paid/payable to working partners as authorized in partnership deed.
2) Maximum amount specified u/s 40(b)
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On the first Rs. 3,00,000 of book profit or in case of loss |
90% of book profit or 1,50,000 whichever is more. |
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On the balance book profit |
60% of the book profit. |
In your case, the book profit is 62,000/-
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On the first Rs. 3,00,000 of book profit |
90% of book profit = 90%*62,000 = 55,800 or 1,50,000 whichever is more. |
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On the balance book profit |
N.A. |
Hence, the maximum allowed remuneration will be 1,50,000/-.
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If the firm has paid Rs. 72,000/- as remuneration to its partners, the same is allowed as deduction as it is the mimimum of the two limits.
First 300,000/- = 150,000/- or 90% whichever is higher
Remaining = 60%
I agree with Deepak Gupta.
Section 40(b) of Income Tax Act gives the maximum allowed Partners renumeration.
In your Case,The Book Profit whether Rs. 62,000 or Rs.72,000 is Below The Slab of 3,00,000 Up to 3 Lac book profits- the allowable Renumeration is 90% of Book Profits or Rs.. 1,50,000 wyichever is More.
You can refer Section Analysis of section 40(b) of Income Tax Act, which will clear all Your Doubts on this Link:https://www.exploreincometax.com/Indian-Income-tax-Act-1961/Section-40b
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